Unit economics for e-commerce
In short
Unit economics compares what a customer costs to acquire with the contribution they bring over a stated horizon. In an illustrative cohort, a CAC of 180 is recovered in month 5. Two cohorts with the same 3:1 LTV:CAC can recover in month 5 or month 19, so a profitable forecast can still need financing.
The guides connect order costs, campaign return and cohort payback. Keep realised outcomes separate from estimates so a budget decision shows both the expected return and its uncertainty.
CAC against CLV, on a payback period rather than a session.
What this covers
- 01What actually gets subtracted before profitRead
- 02Whether a campaign made moneyRead
- 03How long until a customer pays back what they costRead
Every article in this cluster
Common questions
What is a good CAC to CLV ratio?
The ratio circulated most often is 1:3, and it is close to meaningless without a time horizon — a CLV measured over five years and one measured over twelve months describe different businesses. Fix the horizon first, then the ratio means something.
Should CAC include organic customers?
Blended CAC uses the included acquisition costs and all new customers. Paid CAC uses a paid scope and the corresponding customer count under a stated attribution rule. Organic acquisition can also cost money. Report the scope before comparing the ratios.
How far out should CLV be measured?
Choose a horizon suited to the decision and the available cohort history. Purchases already observed remain measurements even across several purchase cycles. Future purchases are forecasts and should include assumptions and uncertainty.
See it on your data
Loyalz joins ad spend to settled order lines, so the numbers in these articles are columns rather than a spreadsheet you rebuild every month.
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